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© Copyright Openet Telecom, 2009
Closing the The demand for mobile data is exploding, presenting operators with a unique opportunity
to generate new revenue streams and grow their business. Mobile data traffic is growing 3.2
Mobile Data times faster than fixed data traffic and is forecast to grow 39 fold from 2009 to 2014 globally,
driven by mobile video, P2P, gaming, and VoIP (Figure 1). In June 2010, it was announced
Revenue Gap that Vodafone Spain users who browsed the Internet on their mobile phone were spending 30
per cent more than the average Spanish mobile users. In Q2 2010, Verizon Wireless reported
an increase of over 23% in data revenue; and mobile data represented over 30% of the ARPU
for AT&T, Verizon, and Sprint. And this is only the beginning of the trend...
The fast growth of the mobile data market is driven by 3 main factors: new devices, next
generation networks, and new applications.
New mobile Internet devices, including smartphones, tablet PCs, and netbooks, make the
use of mobile data more convenient and more pleasant. For instance, most of them support
over-the-air provisioning, enabling subscribers to access data when and where they need
it. As these devices proliferate and rise in popularity, they highly stimulate the consumption
of mobile data, representing a critical revenue driver for operators: AT&T stated that the net
present value of an iPhone subscriber is more than twice that of a typical postpaid subscriber;
many other operators have reported ARPU uplift of 25% to 40% (Telenor Norway has reported
60%) and increased loyalty when a user migrates to a smartphone, according to Informa
Telecoms & Media.
3G+ 2G 0%
29% 2G 2.5G
17% 25%
Furthermore, the new mobile device market is growing fast and sales of 3G+ handsets will
grow from 29% of total handset sales in 2009 to 75% in 2014; with smartphone penetration due
to rise from 16% in 2009 to 37% in 2014 (Figure 2).
It is important to note that whilst increasingly sophisticated smartphones supporting advanced
applications are being launched, there is also a growing market for less expensive, less
advanced devices, especially in developing countries. Operators need to be able to support
both markets in order to maximize their revenue potential.
As mobile Internet devices proliferate, so do mobile applications, driving further the
consumption of mobile data and contributing to the explosion of data traffic. Even greater
growth is expected in this area with the multiplication of application stores, social networking
applications such as Facebook, gaming, and many more.
As high speed, high bandwidth networks such as 3G, WiMAX, and LTE are being deployed,
they contribute to the growth of mobile data as they enable a mobile broadband experience
similar to the home broadband experience.
Whilst these three key factors are driving mobile data growth, operators are confronted with a
gap between the revenue generated and the increasing cost of the traffic. This major challenge
must be resolved to capitalize on the mobile data opportunity and make it profitable.
Initially, operators launched unlimited, flat rate plans to drive adoption of mobile data. This
approach worked but causes two key issues: firstly, flat rate plans present a limited potential
for growth; subscribers initially drive some growth by purchasing new data plans but with time,
there are fewer and fewer subscribers left to adopt the plan, thus slowing growth (exhibit 4).
Secondly, the explosion of mobile data traffic is causing capacity issues, driving operators to
increase their investment in network resources to support such growth. The related cost is high
but without an acceptable quality of service, operators would only drive customers away and
would not be able to profit from this lucrative opportunity.
Figure 4: Mobile data service revenue & annual growth rates 2007 - 2014
Source : Pyramid Reearch Mobile Data Forecasts, Global, Q1 2010
For instance, video represents the fastest growing traffic, expected to account for 66% of
mobile data traffic by 2014 (Figure 1). Increasingly more operators are planning to capitalize
on the popularity of video and offer services such as “TV Everywhere” which enables
subscribers to watch TV programming on multiple devices. However, video consumes a lot of
bandwidth and requires a high quality of service. The increased popularity of such services
tends to accelerate the gap between the mobile data traffic and revenue growth.
This gap between revenue and demand is significant and expected to widen with time
if operators don’t take action now. This is a critical challenge that must be addressed to
capitalize on the mobile data opportunity and increase profitability.
New business models enabled by Policy and Charging Controls are based on 3 key elements:
¨¨ Context: Under what context is the service being accessed? Is the subscriber in a
usage tier? Roaming? In a congested area? Using a particular device? Accessing
premium content? Etc.
¨¨ Resources: Given the context, what network resources is the subscriber attempting
to consume? For instance, a video session would require different network resources
versus a simple e-mail service. PCC enables operators to allocate resources in real time
as appropriate to the context.
¨¨ Price: Given the context, resources used, and related cost, what is the appropriate
price to charge for the service or application? How is the consumption being paid for,
by whom? Is the subscriber enjoying a promotion in which the first 15 minutes of a
movie is received at high quality for free? Is the network resource included in the cost of
the application? PCC enables operators to manage costs in real time and charge users
appropriately depending on the resources consumed and the context.
Examples of PCC based business models include: Tiered services allowing segmentation
of users to offer differentiated services depending on usage patterns; Service passes
mentioned above; Application-specific pricing which represents a critical path towards mobile
data profitability as discussed above; Dynamic, personalized promotions; Spending limits;
Partner service controls; Device controls; and Roaming controls to better enable operators to
interconnect with their oversea counterparts so users can access their services when away
from home.
Customer Segmentation
Subscribers in the telecom industry have different behaviours, needs, and spending patterns.
An effective segmentation will allow operators to group subscribers in order to develop
differentiated offerings and target them with the most appropriate services. By doing so,
operators would not only be able to better satisfy their customers, but also to optimize their
market potential. For instance, operators can use data Service Passes to target customers
who would not commit to a long-term contract as well as travellers. They represent a segment
which would have remained unexploited if this type of offerings wasn’t developed with them in
mind. Another example involves Tiered Services allowing operators to provide different level
About OPENET of services depending on customers’ behaviours and needs.
In an era of open networks,
Effective customer segmentation enables operators to better differentiate themselves from the
greater customer choice,
increased bandwidth
competition and to maximize their revenue potential.
demands, and new content
and services, operators
Real-time Customer Interactions
need to Make the Most of
Every Customer. Openet
Operators can build customer loyalty and increase spend through real-time interactions that
deploys Transactional provide subscribers with visibility and transparency, and operators with the opportunity to up-
Intelligence solutions that sell. Examples of real-time notifications include:
maximize the value from
¨¨ Advise that a service or promotional balance is about to expire, and prompt a refill
network investments and
creates satisfied customers. ¨¨ Send spent limit notifications at given thresholds
Transactional Intelligence
is the ability to create value
¨¨ Advertize the availability of a service promotion
from network activity and ¨¨ Confirm a charge or a change of rate plan
to dynamically control
subscribers, networks and ¨¨ Verify a successful bundle subscription
services. This added to personalized, differentiated, and flexible services, contribute to gaining
At the core of our Transactional
customers’ trust and building loyalty. As a result, operators will be able to lengthen customers’
Intelligence solutions is the lifetime value and increase profitability
FusionWorks Framework, a
convergent, modular, real-
time event processing and SUMMARY
transaction management Mobile data growth, stimulated by the proliferation of new mobile devices, new mobile
platform. FusionWorks enables
applications, and the advent of next generation networks, present operators with a lucrative
operators to transform their
BSS/OSS environments to
monetization opportunity. However, they are not yet equipped with the tools they need to
capitalize on new services, capture maximum revenue from this opportunity. As a result, mobile data traffic is growing
business models and network much faster than revenues, requiring more capacity and generating high costs. This leaves
investments. A global operators with a substantial revenue gap that they need to close to ensure profitability. To
company, Openet is used by achieve this, not only do they need to increase revenue, but also to minimize costs and
the world’s largest and most keep customers happy. The following models and capabilities will help them to address this
innovative service providers situation:
including AT&T, BT, Orange,
Telstra, Time Warner Cable, ¨¨ Integrated Policy and Charging Controls
and Verizon Wireless. Learn
¨¨ Charging plans beyond traditional pre/post-paid models
more at www.openet.com.
¨¨ Charging models incorporating third parties
¨¨ Subscriber Centric Approach
These capabilities will enable operators to better address their customers’ needs, develop
effective revenue models and combine monetization with control. As a result, they will be
able to optimize their revenue potential, reduce costs, better differentiate themselves from the
competition, and increase their customer lifetime value.
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© Copyright Openet Telecom, 2010